Distribution Agreement Asset Management

The asset manager must follow this commission separately for each distributor and perhaps also for the associated seller – and closely monitor distributor transfers, investment amounts and dates for buying and selling investments. Distributors will then receive commissions based on their clients` investment in the fund during the previous period, based on certain criteria and pre-determined rates. Investec Asset Management has signed a distribution agreement with Banca Generali for the distribution of the luxembourg-based sicav Global Strategy Fund, which is authorised and available on the Italian market. Since this royalty is based on the value of the asset and the share of the assets that has been contributed by a distributor`s customers, there are a multitude of moving parts. Record the value of the asset at any given time, find out how much value each distributor made available to the fund in the previous period, link that value to the right commission rate or interest rate, and monitor when each investor is added or withdrawn from the fund – all of which go to tracking and distributing commissions and associated incentive payments. Asset managers are encouraging distributors to attract new investors to the fund. This activity is based on the realization that getting more investors into a fund will improve asset growth, which offers all investors greater return potential. The most common terms used to define these distribution structures are: trailer fees, discounts, commissions, retrocessions, incentive fees, incentives and 12b-1 fees (in the United States). Third-party distribution partnership agreements differ from sector to sector.

Many third parties also offer a number of services that support investment funds. Current challenges for an asset manager include determining the true value of the asset at the maturity of the distribution, applying the correct commission rate, setting the correct commissions of clients who have joined the Fund or left the fund during the period, verifying the sending of correct payments to the relevant distributors and ensuring a precise and transparent reporting structure.